Ecommerce ecosystem & India's consumer welfare | Economic Times

GoI’s proposed amendments in the Consumer Protection (E-Commerce) Rules, 2020, comprise a political move that aims to satisfy a limited segment of players, not consumers. It will also unlevel the playing field, and will be bad for India’s struggling economy.The spirit of the consumer protection regime is to protect end-consumers and provide a layperson easy access to the legal process. But the proposed amendments — which include many elements of platform-to-business (P2B) and business-to-business (B2B) regulations — will add to the complexity, and goes against the spirit of the Consumer Protection Act, 1986.These proposed rules are a leap of bad faith, as they will significantly contribute to India’s loss of competitiveness. India stands 43rd among 64 countries in the Switzerland-based Institute for Management Development’s (IMD) Global Competitiveness Index for three years. This is unfortunate, since as a growing economy, India should be doing better, as it has been in the World Bank’s Ease of Doing Business (EoDB) rankings.There is also a genuine concern regarding the potential misuse of the executive’s legislative power, where there is a tendency to include elements that should be in the main law passed by Parliament. Such misuse not only disturbs constitutional checks and balances but also creates a huge sense of policy uncertainty, adversely affecting the investment climate.The evolving ecommerce ecosystem has contributed significantly to the country’s consumer welfare. Tech-friendly consumers are able to avail of items for home delivery during the ongoing pandemic. Therefore, more than ever, India’s policy approach should be such that it enhances the ecosystem, rather than constricting it, and, at the same time, deal with identified concerns.The present policy approach is lacking in this regard, as it tends to micromanage ecommerce. This will adversely affect the ecosystem, which, in turn, will go against consumer interests. Inserting the ‘abuse of dominance’ provision as an amendment to the proposed rules is a particularly bad idea. It is a domain of the Competition Act, 2002.Does that mean a consumer can go to a consumer forum for any abuse of ‘dominance’ matters? GoI should be careful in avoiding any such regulatory overlaps and creating multiple fora adding to the prevailing regulatory uncertainties.In any event, GoI is keen to follow a better regulatory drafting process so that laws and rules are coherent and cogent, and, thereby, improve our EoDB rankings. To do so, many departments of governments at the Centre and in the states are also following a three-pronged approach to test all policies, laws and regulations: necessity, legality and proportionality.The proposed regulations fail on all three counts. One, they are not necessary as they are unlikely to improve consumer welfare. Two, they are also not legal, because the bureaucracy has overstepped its powers by drafting rules that need to be drafted in the main law, if at all, by Parliament. Three, they are not proportional at all, with the costs, in all likelihood, to outweigh the benefits.More importantly, there are ongoing investigations against the big ecommerce platforms by the Enforcement Directorate (ED) and the Competition Commission of India (CCI) on concerns like ‘preferential treatment’ and ‘deep discounting’, which the proposed amendments are supposedly meant to tackle. GoI should withdraw the impugned proposal and wait for the outcome of such investigations, so as to consider any further policy changes, if at all required.